Surprise! Last Year's Deficit Actually $5 Trillion

Posted: May 24, 2012 3:31 PM

Since 2009, and since Senate Democrats last passed a budget, the Congressional Budget Office has calculated $1 trillion deficits each year with 2012 being no exception. But now, a new USA Today study shows that last year's budget deficit wasn't $1 was actually $5 trillion.

The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government's books.

It is well known by now that even if the government confiscated 100% of the wealth held by millionaires and billionaires in America, we still couldn't pay off the $15 trillion+ national debt. But the latest $5 trillion deficit number doesn't only impact millionaires and billionaires.

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.

Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.

A U.S. household's median income is $49,445, the Census reports.

So how is it that the CBO was off by $4 trillion?

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

Math is hard when you're not adding all the numbers.....over to you Paul Ryan.